Question 1

Other things the same if reserve requirements are decreased, the reserve ratio

Accepted Answer

A)   decreases, the money multiplier increases, and the money supply decreases.
B)   increases, the money multiplier increases, and the money supply increases.
C)   decreases, the money multiplier increases, and the money supply increases.
D)   increases, the money multiplier increases, and the money supply decreases.E) A) and B)
F) None of the above

Question 2

An increase in the reserve requirement increases reserves and decreases the money supply.

Accepted Answer

A) True 
 B)False

Question 3

The prices of goods at a grocery store are listed in dollars. Which function of money does this illustrate?

Accepted Answer

The answer of The prices of goods at a grocery...

Question 4

If the reserve ratio is 4 percent, then the money multiplier is

Accepted Answer

A)   24.
B)   25.
C)   26.
D)   4.E) C) and D)
F) B) and D)

Question 5

Consider five individuals with different occupations.  In a barter system which of the following pairs has a double coincidence of wants?

Accepted Answer

A)   Allen and Eric
B)   Diedre and Calvin
C)   Both A and B are correct.
D)   None of the above are correct.E) All of the above
F) B) and D)

Question 6

Money, such as gold, with some intrinsic value is called . Money with no intrinsic value is called .

Accepted Answer

commodity ...

Question 7

You believe the dollars you have today will be accepted in the future in exchange for goods and services. Which function of money does this illustrate?

Accepted Answer

The answer of You believe the dollars you have today...

Question 8

The most common method employed by the Fed to increase the money supply is the

Accepted Answer

A)   sale of U.S. government bonds.
B)   purchase of U.S. government bonds.
C)   sale of gold.
D)   increase of the federal debt ceiling.E) A) and B)
F) B) and D)

Question 9

Banks are able to create money only when

Accepted Answer

A)   interest rates are above 2%.
B)   the Fed sells U.S. government bonds.
C)   the reserve ratio is 100%.
D)   only a fraction of deposits are held in reserve.E) A) and D)
F) None of the above

Question 10

Which of the following is included in both M1 and M2?

Accepted Answer

A)   currency
B)   demand deposits
C)   other checkable deposits
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 11

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

Accepted Answer

A)   money supply to fall. To reduce the impact of this the Fed could lower the discount rate.
B)   money supply to fall. To reduce the impact of this the Fed could raise the discount rate.
C)   money supply to rise. To reduce the impact of this the Fed could lower the discount rate.
D)   money supply to rise. To reduce the impact of this the Fed could raise the discount rate.E) A) and B)
F) A) and D)

Question 12

If the reserve ratio is 12.5 percent, then $2,000 of additional reserves can create up to

Accepted Answer

A)   $8,000 of new money.
B)   $16,000 of new money.
C)   $32,000 of new money.
D)   None of the above is correct.E) None of the above
F) A) and D)

Question 13

Demand deposits are included in

Accepted Answer

A)   M1 but not M2.
B)   M2 but not M1.
C)   M1 and M2.
D)   neither M1 nor M2.E) B) and C)
F) A) and B)

Question 14

The money multiplier is when the reserve ratio is 12.5 percent.

Accepted Answer

The answer of The money multiplier is when the reserve...

Question 15

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

Accepted Answer

A)   It has $25 in reserves and $4,975 in loans.
B)   It has $250 in reserves and $4,750 in loans.
C)   It has $1,000 in reserves and $4,000 in loans.
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 16

M2 is both larger and less liquid than M1.

Accepted Answer

A) True 
 B)False

Question 17

Table 29-6.
 
-Refer to Table 29-6. Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?

Accepted Answer

A)   $10,833.33.
B)   $13,000.
C)   $8,333.33.
D)   $10,000.E) All of the above
F) None of the above

Question 18

Table 29-7.
 
-Refer to Table 29-7. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?

Accepted Answer

A)   8.1 percent
B)   11.0 percent
C)   12.4 percent
D)   89.0 percentE) A) and C)
F) B) and C)

Exam 21: The Monetary System

Money, such as gold, with some intrinsic value is called . Money with no intrinsic value is called .

Correct Answer
verified
commodity ...
View Answer

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

Correct Answer
verified

Demand deposits are included in

Correct Answer
verified

Correct Answer
verified

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

Correct Answer
verified

You believe the dollars you have today will be accepted in the future in exchange for goods and services. Which function of money does this illustrate?

Correct Answer
verified

If the reserve ratio is 12.5 percent, then $2,000 of additional reserves can create up to

Correct Answer
verified

The prices of goods at a grocery store are listed in dollars. Which function of money does this illustrate?

Correct Answer
verified

If the reserve ratio is 4 percent, then the money multiplier is

Correct Answer
verified

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

Correct Answer
verified

Table 29-7. -Refer to Table 29-7. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?

Correct Answer
verified

The money multiplier is when the reserve ratio is 12.5 percent.

Correct Answer
verified

Which of the following is included in both M1 and M2?

Correct Answer
verified

An increase in the reserve requirement increases reserves and decreases the money supply.

Correct Answer
verified

Other things the same if reserve requirements are decreased, the reserve ratio

Correct Answer
verified

M2 is both larger and less liquid than M1.

Correct Answer
verified

Banks are able to create money only when

Correct Answer
verified

The most common method employed by the Fed to increase the money supply is the

Correct Answer
verified

Exam 21: The Monetary System

Money, such as gold, with some intrinsic value is called . Money with no intrinsic value is called .

Correct Answerverifiedcommodity ...View AnswerShow Answer

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

Correct AnswerverifiedShow Answer

Demand deposits are included in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

Correct AnswerverifiedShow Answer

You believe the dollars you have today will be accepted in the future in exchange for goods and services. Which function of money does this illustrate?

Correct AnswerverifiedShow Answer

If the reserve ratio is 12.5 percent, then $2,000 of additional reserves can create up to

Correct AnswerverifiedShow Answer

The prices of goods at a grocery store are listed in dollars. Which function of money does this illustrate?

Correct AnswerverifiedShow Answer

If the reserve ratio is 4 percent, then the money multiplier is

Correct AnswerverifiedShow Answer

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

Correct AnswerverifiedShow Answer

Table 29-7. -Refer to Table 29-7. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?

Correct AnswerverifiedShow Answer

The money multiplier is when the reserve ratio is 12.5 percent.

Correct AnswerverifiedShow Answer

Which of the following is included in both M1 and M2?

Correct AnswerverifiedShow Answer

An increase in the reserve requirement increases reserves and decreases the money supply.

Correct AnswerverifiedShow Answer

Other things the same if reserve requirements are decreased, the reserve ratio

Correct AnswerverifiedShow Answer

M2 is both larger and less liquid than M1.

Correct AnswerverifiedShow Answer

Banks are able to create money only when

Correct AnswerverifiedShow Answer

The most common method employed by the Fed to increase the money supply is the

Correct AnswerverifiedShow Answer

Correct Answer
verified
commodity ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified